Employer in the wrong after dismissal by expedited redundancy

The worker was employed as General Manager of a division of a company that provided products and services to the mining industry. His division provided cables, including testing, repairs and accessories, and couplers. 

From March 2021, tensions and the mutual exchange of grievances arose between the GM and the division’s office manager, who had issues with the GM’s performance appraisal of her. 

Shortly after this, discussions between the company CEO and another manager who was soon to become the company’s Managing Director planned a review to ascertain the best structure by which the company might grow, while reducing its overheads. The new MD developed a strategy for the restructure, in which the GM’s division was to be merged with another, making his role redundant by June 2022

The GM told the MD about the friction with his office manager and its negative effects on his physical and mental health. He complained that the company was not taking it seriously. The MD asked him for information about the complaints to he could understand the situation.

The stress of the conflict led to the GM taking a few days off work.

When he returned, he asked the MD for workplace mediation with the office manager but the MD refused – in a departure from the company’s grievance handling policy – saying he didn’t think mediation ‘would do any good’. The MD then offered the GM voluntary redundancy.

This prompted the GM to take four days off work without providing notice of his absence.

The MD then wrote to him saying that if he didn’t come to work the company would consider he’d abandoned his employment. 

The GM responded by claiming workers compensation.

The MD also approached the company’s vice president and proposed bringing the restructure forward, which effectively brought forward the GM’s redundancy. He told the company’s CEO that the relevant insurer, icare, had advised that there was no problem with making the GM redundant while his workers comp claim was being processed.      

When the GM was made redundant in January 2022 – six months earlier than planned – he claimed that in bringing his redundancy forward, the employer had effectively dismissed him, and that he’d been sacked because he’d complained, taken sick leave and made a workers comp claim. 

He claimed the employer had contravened those provisions of the Fair Work Act 2009 that prohibit employers from taking adverse action against workers for exercising a workplace right, or because of a person’s physical or mental disability.

The former GM also claimed the employer had contravened the FW Act by offering him a voluntary redundancy payment in response to the complaint and/or injury in an attempt to coerce him to not exercise his workplace rights.

He sought compensation for past and future economic loss and general damages for hurt, distress and humiliation.

The case was heard in the Fair Work Division of the Federal Circuit and Family Court of Australia.

In court

The employer submitted that that the GM’s redundancy had formed part of the company’s existing restructuring plan and June 2022 was an outer time limit, rather than the scheduled date for the restructure.

Judge Sophie Given was not persuaded that this was the case. She noted that the MD had done nothing to address the GM’s complaint, beyond asking for more information. He appeared ‘reticent’ to hear about the office manager issue from the GM, he had not planned arrangements such that the GM would not need to interact with the office manager when he returned to work, or even contacted the HR department for further information about the GM’s complaint. Moreover, the MD’s claim that icare had no issue with redundancy while claiming workers comp had been false.

Judge Given concluded that bringing the redundancy forward was a conscious strategy to expedite the termination of the GM’s employment.

The employer had failed to establish, on the balance of probabilities, that it had not acted for prohibited reasons – the GM’s complaint, sick leave and compensation claim had been substantial or operative reasons for dismissing him unlawfully by expediting his redundancy.

Accordingly, the judge found that the employer had contravened ss 340 and 352 of the Fair Work Act.

The parties will be heard separately in relation to any damages and penalty.

What it means for employers

Employers need to ensure that decisions taken in the wake of a worker’s complaints, leave or compensation claim do not add up to adverse action for a prohibited reason, in contravention of the Fair Work Act.

Read the judgment

Farragher v PBE Rutherford Mining Pty Ltd [2024] FedCFamC2G 695 (2 August 2024)